It would seem that “freak” shows began in the 16th century. They were generally traveling shows, going from town to town. Sometimes they would be part of a larger fair.
The most popular freaks apparently were people with extra limbs, no limbs and dwarfs or midgets. There was also a trend of “pickled punks'', which were preserved fetuses, quite well-developed. Those with deformations or abnormalities, like siamese twins were particularly sought-after and they would often be displayed next to the living people with the same or similar abnormalities to add to the effect.
The 19th century was the beginning of the hay day for Freak shows in Europe and then the US. Industrialization meant people had money to spend and were avid for entertainment. In the US “Dime Museums” popped up everywhere. People could view a variety of exotic animals and unusual human beings as well as odd objects and artifacts for a dime.
PT Barnum opened a dime museum that became hugely successful before going on to create his circus. His success was largely thanks to his ability and willingness to create elaborate and fascinating stories for his performers. For example, he found a pair of twins with dwarfism and billed them as “Wild Men of Borneo”, captured when their tribe attacked a merchant ship. No one at the time questioned the story despite these men appearing very Caucasian.
“Freaks” at that time were sometimes just people from very different places and cultures, but as the Europeans of the time new very little about anywhere else, so a person with a different skin color, eye shape, or unusual cultural custom (like neck elongating neck rings), were worth a dime to see. Interestingly, some of these cultural particularities remain significant tourist attractions and tourists will pay much more than a dime to go see them.
Freak shows eventually went out of style and closed down for multiple reasons, mainly because scientific progress has eliminated the birth of people with major physical abnormalities or else doctors are able to “fix” those abnormalities at birth, so we no longer have people with extra limbs. Siamese twins, though still occasionally born, are usually separated at birth. Extra hair growth can be removed and treated. Children that appear to have no limbs or other strangely formed body parts are often aborted.
Also, the general level of knowledge and empathy have largely increased in the world and most people would no longer think it acceptable to put “freaks” on display for others to observe like animals in a zoo. People born with physical abnormalities are no longer considered to be cursed or representative of black magic as they often were in centuries past when they were sometimes hunted down and killed. In those times, freak shows could be a safe haven for people, giving them a social standing and some income as well as protection. Some of them even became quite famous.
One could certainly argue that medical advancements leading to the virtual elimination of “freaks” has also probably eliminated a lot of suffering because it must be difficult to live with major physical abnormalities, but on the other hand, one could also argue that by eliminating “abnormalities” we are also eliminating diversity and the possibility of some extraordinary lives.